mortgage insurance
home protection plan
HOME PROTECTION PLAN
Product Guide
For exclusive use by
financial advisors
A PARTNER YOU CAN TRUST.
TABLE OF CONTENTS
1
HOME PROTECTION PLAN OVERVIEW .....................................................................................................2
2
INTRODUCTION ................................................................................................................................................3
3
SALES STRATEGY ...........................................................................................................................................3
4
TYPES OF MORTGAGE LOANS ....................................................................................................................4
5
AVAILABLE COVERAGES ...............................................................................................................................5
5.1
LIFE INSURANCE ..............................................................................................................................5
5.1.1 Issue Rules ......................................................................................................................................5
5.1.2 Premiums .........................................................................................................................................7
5.1.3 Beneficiary .......................................................................................................................................8
5.1.4 Conversion Privilege ......................................................................................................................8
5.1.5 Joint Insurance ................................................................................................................................8
5.2
DISABILITY INSURANCE .................................................................................................................8
5.2.1 Issue Rules ......................................................................................................................................9
5.2.2 Premiums ....................................................................................................................................... 11
5.2.3 Definition of Disability ................................................................................................................... 11
5.2.4 Protection Subscribed by Two Insureds .................................................................................... 11
5.2.5 Beneficiary ..................................................................................................................................... 11
5.2.6 Changing the Level of Coverage ................................................................................................ 12
5.3
Complementary coverages .............................................................................................................. 12
6
UNDERWRITING ............................................................................................................................................. 12
7
CLAIMS .............................................................................................................................................................. 13
Home Protection Plan
1 HOME PROTECTION PLAN OVERVIEW
Basic Plan
Life Insurance
Additional
Benefits
Rider
WPDi
Disability
Insurance
Critical Illness
Insurance
AD
AD&D
50%
100%
AF
MGI
Basic
Plan:
Life Insurance
•
•
•
•
18-64 years old
Mortgage balance (from $10,000 to $1,000,000)
Amortization period (maximum 30 years)
$50 regardless of the number of insureds (integrated to
premiums)
• Individual or joint (first-to-die)
• Every insured must take out life insurance coverage
Rider:
Age at issue
Face amount
Term of insurance
Policy fees
Disability Insurance
• Age at issue
• Choice of coverage
•
•
•
•
18-54 years old
50 or 100% of monthly mortgage payment (max. $5,000 /
month)
2 years or until end of amortization period (insured < 65
Benefit period
years old)
Disability definition Own occupation over 24 months
Individual or joint (maximum benefit equals 100% of required mortgage instalment.)
Includes waiver of contract premium
Additional • Waiver of Premiums in the Event of the Applicant’s Disability (WPDis)
Benefits: • Accidental Death (AD) and Accidental Death and Dismemberment (AD&D)
• Critical Illness
• Accidental Fracture (AF)
• Mortgage Guaranteed Insurability (MGI)
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2 INTRODUCTION
The purpose of the Home Protection Plan mortgage insurance is to meet the financial security needs of
real estate mortgage borrowers. More specifically, it aims to cover a broader range of financial needs
than those covered by the group mortgage insurance, offered by the primary lending institutions, which is
largely based on the loan instead of the person.
Thanks to the broad range of financial coverage available at an affordable cost, the Home Protection Plan
is a very flexible product that can be tailored to your client’s needs. Even though your clients’ situation
and needs may change over the years, the Home Protection Plan will accompany them through these
changes (moving, changing lending institutions, renovations, etc.).
By offering life insurance coverage as a basic plan, Home Protection Plan allows you to add additional
coverages such as the disability and critical illness riders, as well as additional benefits such as waiver of
premiums in the event of the applicant’s disability (WPDis), accidental death (AD), accidental death and
dismemberment (AD&D), accidental fracture (AF) and mortgage guaranteed insurability (MGI).
COMPETITIVE ADVANTAGES
Since the Home Protection Plan is an individual life insurance product, the client receives all the
benefits associated with this type of product. The primary advantages are as follows:
•
•
•
•
•
•
•
•
•
•
Customized insurance coverage which may include a number of additional insurance benefits
Control over the contract (the client is the owner)
Guaranteed, level insurance premiums for the entire term of the contract
Ability to convert contract to permanent life insurance, with no medical examination
Protection against an increase in interest rates upon mortgage renewal
Critical illness insurance rider (covering 4 illnesses)
Disability definition of own occupation covers 24 months (instead of the usual 12)
Remains in force even when the insured changes lending institutions
Ability to choose the beneficiary (can be different than lending institution)
Underwriting done at the time of application, rather than at the time of claim
3 SALES STRATEGY
This product targets homebuyers as well as mortgage loan holders. The Home Protection Plan gives us
access to a strategic market niche since the value of a property often represents the most significant
asset held by most Canadian households.
The majority of mortgage insurance is purchased when people take out a loan with one of the primary
Canadian lending institutions. Clients are so busy with all the other tasks involved in getting a loan and
buying their property that they don’t have time to shop around for insurance. This purchase is often made
hastily.
Although clients can decline the insurance, they usually feel a certain amount of pressure because they
often believe mistakenly that there’s a direct link between enrolling in the insurance and getting approved
for the loan, or that it comes as a “package deal”.
Often clients are not aware of the cost because the calculations are complex and difficult to understand.
Furthermore, they have very little information about the terms and conditions of the insurance, how the
premiums work, etc.
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CLIENT STRATEGY
First, it would be useful to explore with your client the costs, conditions and limitations of his current
coverage, or of the proposed coverage in the case of a new loan. Your client might have to refer to his
financial institution because in most cases clients are unaware of their costs and conditions of their
coverage.
Once you understand what your clients needs and wants are, you will be able to highlight the differences
between the coverage offered by the lending institution and the coverage offered by the Home Protection
Plan.
Below are a few questions that could help you obtain information about your client’s mortgage insurance:
•
•
•
•
•
•
What is the current cost of the coverage?
What will the cost be in 5 years?
What will the cost be when the client changes age groups?
Is the premium integrated to the interest rate and reduces the mortgage balance at renewal?
What happens if the client refinances with a different financial institution or increases the loan? Is the
existing insurance cancelled?
In the definition of disability, what period of time is specified for “own occupation”?
4 TYPES OF MORTGAGE LOANS
What are the types of eligible mortgage loans? The loan must be reimbursed though pre-established
periodic instalments based on an interest rate and an amortization period. Those instalments must bear a
capital
and an interest portion.
•
•
Are excluded:
Interest-only mortgages
Line of credit mortgages
Eligible mortgages include loans for which:
•
•
•
•
•
The remaining term is equal to or less than 30 years
The balance is between $10,000 and $1,000,000
The contract complies with the jurisdiction where the loan is contracted and published
The mortgage is a first or second rank one, provided the face amount at issue always equals 100% of
the mortgage balance
The mortgage is secured by real estate (a single-family home, a multi-unit dwelling, a business, a
farm, a cottage or a piece of land – the definition is broad provided the above conditions are met)
CLIENT ADVANTAGE
When a financial institution advances money on a mortgage loan, such as when construction begins, or
as soon as the purchase contract is signed, the client can immediately subscribe to the Home
Protection Plan. The client doesn’t have to wait until the monthly instalments have begun. However, to
take advantage of this, the lender’s commitment will have to be provided.
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5 AVAILABLE COVERAGES
With its great flexibility, the Home Protection Plan can be tailored to your client’s needs and offer a highly
personalized product. The Home Protection Plan provides life insurance coverage under its basic plan.
As an additional option, the insured can get disability insurance, critical illness insurance, and many other
benefits.
5.1 LIFE INSURANCE
The life insurance coverage offers financial security to the insured and his or her heirs so they can keep
their property in the event of the insured’s death before the mortgage is completely paid off. It can be
taken out on an individual or joint basis.
5.1.1



Issue Rules
Age at Issue: 18 to 64 years old
Term of the coverage
Term of Insurance: amortization period of the loan (maximum 30 years)
In principle, the amortization period of the mortgage loan will be the period remaining, at the time of
issue, until the loan is paid off. However, if the loan is refinanced during the term of the coverage,
the amortization period will be adjusted to take into account the new term, subject to a maximum
amortization period of 30 years.

Initial Face Amount: between $10,000 and $1,000,000
The face amount is always equal to 100% of the balance remaining on the mortgage loan at the time
of death. A contract cannot be issued for less than 100% of the loan.

Death Benefit
The face amount is always equal to the mortgage balance since it’s tied to the loan repayment schedule.
Therefore, the amounts paid at death correspond exactly to the loan balance.
The Home Protection Plan doesn’t cover the following amounts: arrears, reimbursement penalties,
mortgage closure and discharge fees and taxes.
If the loan increases (refinancing)
If, at death, the loan balance is different from the amount provided in the loan repayment schedule, the
death benefit is calculated proportionally, as follows.
Mortgage balance before refinancing
(as provided in repayment schedule)
Death benefit = Loan balance at death X
Example
New mortgage balance after
refinancing
Initial mortgage: $250,000
Amortization: 25 years
Interest rate: 6% (constant)
Refinancing after 10 years. Mortgage balance on that date: $190,445
Amount of refinancing: $50,000 (same amortization, same rate, hence higher payment),
which gives $240,445 over 15 years
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5 years later: Death. Mortgage balance at death: $182,169
$190,445
Death benefit = $182,169
=
X
$240,445
$182,169 X 79.21 % = $144,296
Prepayment combined with refinancing
Example
The client made a prepayment and never requested an adjustment to his contract.
After 10 years:
• Balance: $150,000
• Balance as it should be according to initial schedule: $190,000
• Refinancing: $40,000 with the same amortization period
5 years later: Death. Mortgage balance at death: $135,000 (lower than the initial schedule because the
client continues to make prepayments).
In calculating the benefit, we don’t take into account the prepayment, only balances.
$150,000
Death benefit = $135,000
X
$190,000
=
$135,000 X 78.95% = $106,582
The same rules apply to the disability benefit because it’s the same calculation, which takes into
consideration the current payment required before any type of prepayment.
If the amortization period is extended (with no loan increase)
The client keeps the same mortgage balance, but increases the duration of his mortgage.
Example: Initial amortization of 15 years changed to a 25-year amortization
The contract isn’t adjusted in this situation.
Death benefit = Loan balance at death
However, under the Home Protection Plan maximum amortization term, the coverage ends after 30 years.
Consequently, no benefit is payable when the 30-year period has elapsed.
For a conversion into a mortgage line of credit
The contract remains in force and a new repayment schedule is calculated. The decrease in the balance
is calculated according to:
• the balance;
• interest rate;
• remaining amortization term;
when the loan is converted into a mortgage line of credit.
Given the variable nature of the line of credit, the benefit paid in case of death could be different from the
line of credit balance.

Termination of the Home Protection Plan contract
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The contract terminates when the first of the following events occurs:
• Upon the death of the insured (or one of the joint insureds)
th
• On the 30 anniversary of the contract
• On the date the mortgage loan is reimbursed unless the loan has been refinanced
• On the date the mortgage loan is replaced by a new one that is not eligible
• On the date the amortization period of the mortgage loan ends
If the insured neglects to advise the Company that one of the latter three events has
occurred but does it later, the Company will reimburse the premiums paid since that date
up to a maximum of one year.
• On payment of the critical illness benefit when a Home Protection Plan critical illness protection
was selected initially by the insured (or one of the insureds)
• On the date the contract is cancelled
5.1.2
Premiums
The life insurance premiums are based on the face amount at issue. They are level and guaranteed for
the full term of the contract. The premiums are based on the sex of the insured, tobacco use, and age
group at issue. Policy fees of $50 apply to the basic plan (life insurance), regardless of the number of
insureds. This amount is guaranteed for the duration of the contract and integrated to the premium
amount.
For reasons of simplicity and for making comparisons with similar products offered by financial
institutions, our premium rates are expressed by the following age groups:
Age Groups
18 to 30
46 to 50
31 to 35
51 to 55
36 to 40
56 to 60
41 to 45
61 to 64
Note that this product does not include preferred categories.
The client has the choice of paying the premiums on a monthly or annual basis by pre-authorized
cheques (PAC). If the payments are on a monthly basis, the premium correspond to the annual premium
amount times 0.09.
Lump Sum Payment
The premium may be adjusted once a year at the insured’s request if his/her mortgage balance has
decreased faster than expected due to lump sum payments. Downward premium adjustments will be
based on the total pre-payment amount (subject to a minimum lump sum amount of $5,000).
Additional Coverage
A second mortgage can also be added to the existing contract (leasehold improvement, cottage, etc.).
The increased premium is calculated based on the attained age and the increase in the face amount.
This additional coverage must comply with the initial maximum contract term of 30 years.
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5.1.3
Beneficiary
The Home Protection Plan offers applicants the advantage of designating the beneficiary of their choice.
It gives the client more flexibility, and imposes no restrictions on how the beneficiary may use the money.
The name of the beneficiary must appear on the application, and does not have to be the lending
institution. At the time of death, the face amount is paid to the beneficiary.
WHAT ARE THE ADVANTAGES OF APPOINTING A BENEFICIARY
OTHER THAN THE LENDER?
At the time of death, the beneficiary could, for example, take advantage of favourable interest rates.
If mortgage rates are low and investment rates are high, the beneficiary could choose to invest the
money and make the mortgage payments from the investment income.
Or, if the loan has not expired and the lender imposes a prepayment penalty, the beneficiary could
decide to invest the money, make the usual monthly payments, and wait until the loan expires to pay
off the balance in order to avoid any penalties.
Other situations could benefit the beneficiary if he were to receive the amount of money directly and
this way cover other more urgent needs like using part of it to make essential renovations, go back
to school, etc.
5.1.4
Conversion Privilege
The Home Protection Plan offers clients the unique advantage of converting their contract to permanent
life insurance of the same type of protection (individual or joint), at any time before age 65 and without
evidence of insurability. The face amount for the new policy will be equal to the mortgage balance at the
time of conversion. Consequently, the Home Protection Plan contract will terminate upon conversion.
5.1.5
Joint Insurance
Under the Home Protection Plan, applicants can enrol in joint life insurance that protects two insureds
under the same contract. A premium discount is applied for joint life insurance enrolments (basic plan)
and corresponds to 85% of the sum of the individual premiums.
Joint insurance is limited to first-to-die, and the face amount is paid to the designated beneficiary (this
would terminate the contract). However, if the surviving insured is less than 65 years of age, he/she
remains insured for a 45-day period. In the event of a simultaneous death, within 45 days, the face
amount will be paid TWICE.
Moreover, for a joint policy, the spouse does not have to appear on the loan contract: neither for the life
coverage, nor for the disability protection.
5.2
DISABILITY INSURANCE
This protection gives the Home Protection Plan added flexibility because it offers applicants additional
financial security. Statistics show that homeowners run a higher risk of suffering from a fairly lengthy
disability than of dying prematurely before the end of their mortgage amortization period. Without
sufficient coverage, an extended disability could put the quality of life that comes with owning a home at
risk because of a decrease in family income to make the payments.
Disability insurance enables clients to continue making their monthly payments in the event that the
insured is unable to do his job for several months. This protection is available in the form of a rider,
individual or joint, as an option on each insured’s basic plan.
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THESE ARE UNIQUE ADVANTAGES!
Contrary to the Home Protection Plan, none of primary lending institutions offers a conversion privilege
or extended insurance at no additional cost.
In the event of simultaneous death, the group insurance offered by the main lending institutions only
pays once the face amount. The Home Protection Plan pays it twice!
With this additional coverage, applicants will be able to meet their mortgage obligations and maintain their
quality of life.
5.2.1 Issue Rules

Age at Issue: 18 to 54 years old

Eligibility
The client must be employed full time i.e. 20 hours a week, 9 months per year. A change in the
nature of the job is acceptable. However, the client can be unemployed at the time of claim. Postsecondary graduates with a specialty training, who work in their field are accepted even though they
are at work since less than a 1 year.
A man or woman at home is therefore not eligible for disability protection because he/she is
considered as a non-wage earner.
Moreover, for a joint policy, the spouse does not have to appear on the loan contract: neither for the
life coverage, nor for the disability protection.
Commercial mortgage loan
• Business building
Disability is only available if the insured uses at least 50% of the building’s surface area and
his/her income comes from an occupation performed at this location
• Apartment building / owner-occupant
1-3 units; disability 100% available
4-6 units; disability 50% available
7 units +; disability not available

Waiting Period
This benefit has a 1-month waiting period if the disability results from an accident* or if the insured is
hospitalized* for a minimum period of 72 hours, otherwise a 3-month waiting period, with payments
st
retroactive to the 1 month of disability:
* Accident
An unforeseeable event resulting exclusively from external, sudden, violent and involuntary causes,
which occurs independently of any physical or mental illness. This event must occur while the
coverage is in force and cause an injury whose signs must be assessed and documented by a
physician.
Hospital
A short-term care institution legally recognized as such by the government authorities that the
institution reports to.
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This excludes :
A clinic, a nursing home, an extended care facility, a rest or convalescent home, a senior citizen’s
home, a chronic care facility, a handicapped facility, a readaptation centre, an alcohol or drug
rehabilitation centre or any section of a hospital that offers these care or services.

Benefit
One of the features that makes the Home Protection Plan unique is its protection against interest
rate increases upon mortgage renewal. Any increase in mortgage payments due to an increase in
interest rates is fully covered. The disability benefit is automatically adjusted, with no increase in the
premium!
The monthly disability benefit is equal to a percentage of the monthly payment. Two levels of
protection are available to every insured:
• 50% or
• 100%
The monthly disability benefit always corresponds to the chosen percentage of the minimum monthly
mortgage payment required by the lender. The minimum required payment is determined according
to the interest rate, the amortization period and the amount of the mortgage. It corresponds to the
regular instalments planned in the reimbursement schedule at the time of disability.
Where the insured makes higher monthly payments to discharge the mortgage loan sooner, the
amounts in excess of the regular monthly payment are not covered by the monthly disability benefit.
Prepayments in the form of lump-sum payments are also not covered by the disability benefit.
It is rare to find a 20 or a 30-year loan that has not been modified. Because the disability benefit is
subject to the same rules as the death benefit, please refer to section 5.1.1 to learn how the
disability benefit is calculated based on the following changes:
• if the loan increases (refinancing)
• if there is prepayment combined with refinancing
• if the amortization period if extened (with no loan increase)
• for a conversion into a mortgage line of credit
The monthly total disability benefit is limited to a maximum $5,000 at all times. It is not integrated
into any other types of disability insurance other than mortgage disability insurance, if applicable.
The disability benefit will not be integrated with any of the private, group or public insurance plans.
However, these private or public plans may take into account the benefit paid by a private plan such
as Home Protection Plan and readjust their benefit accordingly.
If the total disability entitles the insured to benefit for the same loan under another insurance
contract, the Company does not pay out any benefits and reimburses the sum of premiums paid for
the Home Protection Plan Disability of this contract for a maximum period of 1 year.

Monthly Disability Benefit Period
There are 2 available options:
• 2 years or
• until the end of the amortization period (before the insured reaches age 65)

The duration of the coverage
The duration of the coverage corresponds to the monthly disability benefit period indicated earlier.
The coverage terminates when the first of the following events occurs:
• When the insured reaches age 60, if he or she is not totally disabled
• When the insured reaches age 65, if he or she is totally disabled
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• On the date this coverage or the contract is cancelled
Rules for Recurring Disabilities
Recurring disabilities are also covered. If the insured recovers and returns to work following a disability,
then suffers a relapse associated with the same cause or a related cause within 3 months of the recovery,
the disability will continue as though it had never been interrupted for the remaining term of the disability
benefit period. A new waiting period will not be applied.
Rules for More than One Disability Period
More than one disability is covered. If, after being disabled, an insured recovers completely and then
becomes disabled again due to a different cause that is related or not to the first disability, this new
disability will be covered, subject to a new waiting period.
5.2.2 Premiums
By enrolling in the Home Protection Plan disability insurance, the applicant pays level and guaranteed
th
premiums for the term of the coverage, without exceeding the insured’s 60 birthday. The premiums are
based on the insured’s age at issue, sex and tobacco use.
The disability insurance automatically includes a waiver of full contract premiums (life, disability and,
where applicable, critical illness and additional benefits). The waiver of premiums applies when an
insured covered under the disability rider becomes disabled. The same waiting period applies in this
circumstance.
5.2.3 Definition of Disability
The Home Protection Plan differs from the mortgage insurance offered by most lending institutions in its
definition of disability. Many definitions of disability provide a benefit period of 12 months, while the Home
Protection Plan covers a benefit period of 24 months. The full definition is as follows:
For the first 24 months, disability means the insured’s total and continuous inability to carry out
the tasks of his/her main occupation following an illness or injury. Subsequently, disability is
defined as the total and continuous inability to carry out any occupation whatsoever for which
the insured is reasonably qualified, regardless of the availability of employment.
For insureds who are unemployed, on employment insurance, retired or students at the
beginning of their disability, the disability is defined as the total and continuous inability to carry
out the normal activities of a person of that same age.
5.2.4 Protection Subscribed by Two Insureds
In the event that two disabilities should occur at the same time, regardless of whether or not they result
from the same cause, the monthly disability benefit is limited to the lesser of (1) the minimum monthly
payment required by the financial institution, or (2) the sum of the insured monthly amounts, maximum
$5,000. The benefit will not exceed 100% of the minimum monthly payment required by the financial
institution, even if the insureds selected 100% and 100% respectively or 100% and 50%.
5.2.5 Beneficiary
The beneficiary of the disability insurance coverage must be the applicant. It does not have to be
indicated on the application. When the disability insurance protection is taken out by two insureds and
they are also two applicants, the cheque is issued in both names. Furthermore, when there is only one
insured under the disability rider but two applicants under the basic plan, the cheque is also issued in
both names.
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5.2.6 Changing the Level of Coverage
Once the disability coverage has been issued, the applicant can always change the level of coverage to
100%, 50% or 0%.
Decreasing the Level of Coverage
No evidence of insurability is required since the insured is decreasing the level of coverage.
Increasing the Level of Coverage
Complete evidence of insurability will be required to increase the level of coverage. The existing disability
insurance coverage will be cancelled and the new disability insurance coverage will be issued based on
the rate for the attained age.
5.3
Complementary coverages
Complete insurance coverage adapted to specific needs is the cornerstone of a solid financial program.
That’s why we encourage you to offer the following additional benefits to your clients, so that they are
thoroughly covered when difficult situations arise.
 Accidental Death (AD)
 Accidental Death and Dismemberment (AD&D)
 Accidental Fracture (AF)
 Mortgage Guaranteed Insurability (MGI)
 Waiver of Premiums in the Event of the Applicant’s Disability (WPDis)
 Critical Illness
See all the details about these complementary coverages in the RIDERS AND ADDITIONAL BENEFITS
GUIDE that you’ll find on the Extranet and in the Financial Advisor Library, under Individual Insurance.
You can also download it using Interface.
6 UNDERWRITING
The medical and financial requirements for the Home Protection Plan are the same as those for life
insurance products. They are as follows:
• Life insurance application (F1A)
• Supplemental critical illness questionnaire (Q4A)
• Medical examination required (refer to the table of usual medical requirements)
However, due to the nature of the insurance coverage, the following documentation is required:
• Either the amortization schedule or a confirmation from the financial institution indicating: the
mortgage balance, amortization period, interest rate, instalment amount and frequency. *
* This information can be easily obtained from financial institutions by telephone, from their counter
or through the Internet.
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7 CLAIMS

Upon death or diagnosis of a critical illness
The necessary proofs to confirm the mortgage balance will be required from the financial institution.
It is also recommended you obtain a copy of the amortization schedules for all renewed mortgages
or when the loan has been refinanced.
Furthermore, the interest payable on the face amount from the time of death, or from the time the
critical illness benefit is payable, until settlement of the claim will be paid at the interest rate
applicable to the mortgage loan.

Upon a disability claim
Once a disability is declared, a confirmation from the financial institution of the mortgage balance,
interest rate, amortization period and current instalment amount is
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HOME PROTECTION PLAN
SRM170A-1(12-09)PDF
product Guide